Seeds of Opportunity: The African Growth Series
April 2024 | Issue 2
In this week's issue, you will learn more about:
- The Business of Water: Addressing Africa's Growing Thirst
- AFRICA TREND: Sugar Production in Sub-Saharan Africa
- AFRICA TREND: Oils & Fats Market
- BUSINESS DAY TV INTERVIEW: Africa's path to industrialisation through 4IR-powered SEZs
- UPCOMING EVENT: Enlit Africa 2024 | CTICC, CAPE TOWN
The Business of Water: Addressing Africa's Growing Thirst
Water scarcity poses a significant hurdle to Africa's growth and development, with climate change and deteriorating infrastructure intensifying the challenges. South Africa's recent water crises, where about half of Johannesburg's population of over 5.5 million people have been without water or experiencing shortages for weeks, serve as a dire warning. Residents often wait in long lines for government water trucks, with the supply frequently running out before reaching everyone. This crisis highlights the urgent need for solutions and the immense opportunity for businesses and innovation to make a difference.
The demand for clean water in Africa is only set to skyrocket with population growth and development projects. The fact that 387 million people in sub-Saharan Africa lacked access to essential drinking water in 2020 (up from 350 million in 2000) demonstrates the staggering scale of need. Moreover, as of October 2022, 226 million people in Eastern and Southern Africa lacked access to essential water services, and 381 million lacked basic sanitation. This issue is particularly acute in 9 key countries (Angola, DRC, Ethiopia, Kenya, Madagascar, Mozambique, Sudan, Tanzania, and Uganda), where 80% of underserved people in the region reside. These figures highlight the vast potential market for those providing water solutions. On the other hand, government limitations in tackling the multifaceted water infrastructure challenges underline the crucial role private sector investment and innovation can play.
Decentralised desalination powered by solar energy is a promising solution, particularly in remote or water-stressed communities with access to coastlines or saline aquifers. This technology is becoming increasingly crucial for Africa's water supply mix. Another key opportunity is investing in scalable water technology startups focused on advanced treatment solutions. These companies lower costs, reduce energy consumption and prioritise environmental sustainability, making them crucial in addressing water shortages. Finally, South Africa's severe water infrastructure challenges are a stark reality. This presents a significant chance for the private sector to invest in maintenance, skills development, and partnerships with public institutions.
Companies seeking these opportunities should consider bold investments in novel water technologies like desalination and advanced water treatment. Collaborations with research institutions play a vital supporting role. Additionally, strategic private-public partnerships with local governments and communities will underpin the success of large-scale water projects, ensuring sustainability and long-term viability. Moreover, earning the support of local communities is crucial. Businesses must engage closely with stakeholders, demonstrating their commitment to addressing local needs and fostering trust.
Addressing these challenges has a vast potential impact. Success in these areas could mirror the progress in Ethiopia, where over 5,000 schools have been equipped with water, sanitation, and menstrual hygiene facilities since 2014.
However, the warnings are clear. Cape Town's "Day Zero" crisis in 2018, or Durban's loss of 35% of its water supply to theft, is just a glimpse of the future. South Africa's looming water crisis, with the potential for complete water depletion by 2030, highlights the importance of urgent action.
AFRICA TREND: Sugar Production in Sub-Saharan Africa
Sugar cane has long since been a staple in African production but shifts in global demand to lower calorific foods could begin to change the role that sugar plays in African economies. A recent article published in The Economist showed that Nestle is facing strong stakeholder backlash to shift its portfolio away from predominantly high-calorie confectionary. Research shows that approximately 75% of the company’s sales are due to high-sugar foods, which conflicts with a 2023 commitment to boost nutritious product sales by 50%. This health shift is in line with the rising popularity of weight-loss drugs, which would ultimately decrease the sale of high-sugar foods. This would decrease demand for sugar, in turn negatively impacting African countries that export sugar globally.
Despite this turn of events, sugar production in Sub-Saharan Africa is expected to exhibit a steady increase in the next five years, resulting in an expected production value of just over 10 million tons of sugar. Therefore, the floor is open to hungry investors who can bring the sugar high to new industries.
AFRICA TREND: Oils & Fats Market
Africa's edible oils and fats market is experiencing significant growth, driven by the widespread use of these products in the food and beverage industry. These essential raw materials and functional ingredients are integral to various food products, including confectionery, bakery items, ice creams and more. The market's expansion is fueled by the rising consumption of processed foods, attributed to increasing population and income levels. Additionally, oils and fats are utilised in producing paints, lubricants, paper, soaps, candles, personal care items and cosmetics, offering lucrative opportunities for market expansion. Key players in the market are focusing on production facility expansion and partnerships with domestic manufacturers. For instance, Eni's launch of vegetable oils for biorefining in Kenya and Ethiopia's Ministry of Finance's purchase of palm cooking oils highlight the region's commitment to boosting the demand for fats and oils. The Africa Fats and Oil Market is projected to register a CAGR of 4.5% between 2024 and 2029, indicating a promising future for this sector.
BUSINESS DAY TV INTERVIEW: Africa's path to industrialisation through 4IR-powered SEZs
Learn more as Business Day TV's Africa Trade and Business team discuss Africa's path to industrialisation and how that can be accelerated with Frost & Sullivan Africa Consulting Analyst Hannro Steenekamp.
UPCOMING EVENT: Enlit Africa 2024 | CTICC, CAPE TOWN
Enlit Africa 2024 happening at the CTICC in Cape Town from 21 May – 23 May; explores building a sustainable energy & water future in Africa through discussions on technology, policies, and collaboration.
Join us at Africa's most influential power, energy and water event, where you will experience a packed program with compelling content and speakers, a world-class exhibition presenting cutting-edge technology and services, unparalleled networking opportunities, and much more.
Register for your Early Bird Ticket or Free Visitor Pass here: https://eu1.hubs.ly/H07tDrw0
To find out more about opportunities in Africa, please get in touch with Lynne Martin.
